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Why do Countries enter into Preferential Agreements on Trade in Services? Assessing the Potential for Negotiated Regulatory Convergence in Asian Services Markets

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  • Sauvé, Pierre

    ()
    (World Trade Institute, University of Bern, Switzerland)

  • Shingal, Anirudh

    ()
    (World Trade Institute, University of Bern, Switzerland)

Abstract

More than half of the World Trade Organization (WTO)-notified services trade agreements (STAs) in effect since 2008 have involved at least one (South or Southeast) Asian trading partner. Drawing on Baier and Bergstrand’s (2004) determinants of preferential trade agreements and using the World Bank’s database on the restrictiveness of domestic services regimes (Borchert et.al. 2012), we examine the potential for negotiated regulatory convergence in Asian services markets. Our results suggest that countries within Asia that are more remote from the rest of the world and that have similar economic sizes, greater differences in relative factor endowments compared to the rest of the world, common legal origins, high levels of preexisting trade, and restrictive services regulations are more likely candidates for regulatory convergence. Our empirical model successfully predicts 10 of the 14 STAs negotiated during 2008–12 and 88 of the 89 dyads within Asia that lack an STA.

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Bibliographic Info

Paper provided by Asian Development Bank in its series Working Papers on Regional Economic Integration with number 129.

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Length: 40 pages
Date of creation: 01 Apr 2014
Date of revision:
Handle: RePEc:ris:adbrei:0129

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Keywords: PTAs; services; regulation; regulatory convergence; Asia;

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  1. Cyrille Schwellnus, 2007. "The Effect of Domestic Regulation on Services Trade Revisited," Working Papers 2007-08, CEPII research center.
  2. Thomas Chaney, 2008. "Distorted Gravity: The Intensive and Extensive Margins of International Trade," American Economic Review, American Economic Association, vol. 98(4), pages 1707-21, September.
  3. Shingal, Anirudh & Sauvé, Pierre, 2011. "Reflections on the Preferential Liberalization of Services Trade," MPRA Paper 32816, University Library of Munich, Germany.
  4. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  5. Gene M. Grossman & Elhanan Helpman, 1993. "The Politics of Free Trade Agreements," NBER Working Papers 4597, National Bureau of Economic Research, Inc.
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  7. Trefler, Daniel, 1993. "Trade Liberalization and the Theory of Endogenous Protection: An Econometric Study of U.S. Import Policy," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 138-60, February.
  8. Keith Walsh, 2006. "Trade in Services: Does Gravity Hold? A Gravity Model Approach to Estimating Barriers to Services Trade," The Institute for International Integration Studies Discussion Paper Series iiisdp183, IIIS.
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  10. Egger, Peter & Larch, Mario, 2008. "Interdependent preferential trade agreement memberships: An empirical analysis," Journal of International Economics, Elsevier, vol. 76(2), pages 384-399, December.
  11. Van Der Marel, Erik & Shepherd, Ben, 2011. "Services trade, regulation, and regional integration: Evidence from sectoral data," MPRA Paper 34343, University Library of Munich, Germany.
  12. Daniel L. McFadden, 1976. "Quantal Choice Analaysis: A Survey," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 363-390 National Bureau of Economic Research, Inc.
  13. Shepherd, Ben & Pasadilla, Gloria, 2012. "Services as a New Engine of Growth for ASEAN, the People’s Republic of China, and India," ADBI Working Papers 349, Asian Development Bank Institute.
  14. Carolina Lennon, 2008. "Trade in services and trade in goods: differences and complementarities," PSE Working Papers halshs-00586223, HAL.
  15. Matthew T. Cole & Am¨¦lie Guillin, 2013. "The Determinants of Trade Agreements in Services vs. Goods," Working Papers 1307, Florida International University, Department of Economics.
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